ch9n10prac - 1.

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
1.  When the foreign exchange market sets the relative value of any currency instead of a given nation's central  bank, then that country is adhering to a floating exchange rate regime. A) True B) False Points Earned:  1.0/1.0  Correct Answer(s): 2.  Many of the developing nations place their currencies in relation to a reference currency like the U.S.'s; this is  known as a pegged exchange rate. A) True B) False Points Earned:  1.0/1.0  Correct Answer(s): 3.  Some countries try to hold the value of their currency within a range against an important reference currency,  and this is often referred to as a dirty float. A) True B) False Points Earned:  1.0/1.0  Correct Answer(s):
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4.  The modern approach of pegging currencies to gold and guaranteeing convertibility is known as the gold  standard, and it was one of the financial innovations of the 20 th  century. A) True B) False Points Earned:  0.0/1.0  Correct Answer(s): 5.  The theory of balance-of-trade equilibrium states that when a country's national income earned from exports is  equal to its current account of import payments there is a perfect balance. A) True B) False Points Earned:  1.0/1.0  Correct Answer(s): 6.  The United States re-employed the gold standard in 1934 as a means to reduce the price of U.S. exports and  increase the price of imports, in order to increase employment in the United States by boosting output. A) True B) False Points Earned:  1.0/1.0  Correct Answer(s): 7.  The Bretton Woods System established an international monetary regime between 1944 and 1973 to avoid the  devaluation devastations of the 1930s and WWII; it eventually included the vanquished nations in a new world  order (but none of the communist nations led by the USSR).
Background image of page 2
B) False Points Earned:  1.0/1.0  Correct Answer(s): 8.  Most economists trace the breakup of the fixed exchange rate system in 1973 to the policies of Lyndon  Johnson, who was financing a war and expanding domestic spending while refusing to raise taxes. It is  generally agreed that this was a unique event and has no modern corollary. A) True B) False Points Earned:  0.0/1.0  Correct Answer(s): 9.  The case in support of floating exchange rates has two main elements: monetary policy autonomy and  automatic trade balance adjustments. A) True B) False Points Earned:  1.0/1.0  Correct Answer(s): 10.  The case for fixed exchange rates rests on arguments about monetary discipline, speculation, uncertainty and  the lack of connection between the trade balance and exchange rates. A) True
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/24/2010 for the course ECON 12123 taught by Professor Donald during the Spring '10 term at Johnson County Community College.

Page1 / 20

ch9n10prac - 1.

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online